CalSTRS To Divest From Gun Cos, Smith & Wesson, Sturm Ruger Fall

By Sam Mamudi

The California State Teachers’ Retirement System, better known as CalSTRS, made news today after it announced late Wednesday that its investment committee has decided to divest the fund from “firearms companies that manufacture weapons that are illegal in California.”

Shares of Smith & Wesson (SWHC) closed down 3.6% today after falling more than 2% yesterday, while Sturm Ruger (RGR) stock was off 1.8% after a 0.8% decline Wednesday.

As Dan Primack points out, CalSTRS hardly has a big stake in either company, holding about $1.1 million in Smith & Wesson and $1.8 million of Sturm Ruger stock (though it has a nearly $9 million holding in Freedom Group via its investment in fund managed by Cerberus Capital Management).

But the symbolism is probably more important here: CalSTRS is the second biggest public pension fund in the US, with $154.3 billion in assets; taking this kind of stand is bound to grab the attention of other institutional investors.

Mark Anderson makes an analogy with the fund’s divestment from tobacco companies in 2009 — and that speaks volumes, as it explicitly puts gunmakers in the increasingly socially unacceptable camp where tobacco companies have lived for some years; maybe the terrible shootings in Newtown, Conn., were in fact a tipping point. It’s worth highlighting comments made by CalSTRS investment committee Chair Harvey Keiley when announcing the decision:

This is not only the right thing to do but positions us to deal with the financial pressures we anticipate this sector of the industry will face.

Update: Today’s drops for the gunmakers were also likely due to comments by Vice President Joe Biden this afternoon, who said he plans to submit gun control proposals, which could include high-capacity gun bans and universal background checks for gun sales, to President Obama by Tuesday.

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